IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Hourly Electricity Demand in Italian Market

  • Simona Bigerna
  • Carlo Andrea BOLLINO

In the existing literature only recently there has been attention to consumer demand for electricity in organized markets. In this paper we assume a theoretical model of demand behavior and we estimate a complete system for hourly electricity demand. We use individual demand bid data in the Italian Power Exchange (IPEX). The novel contribution of this paper is twofold. Firstly we construct a theory based behavioral model of hourly electricity demand for agents acting in the Italian market; secondly we measure empirically demand behavior at hourly level, i.e. expenditure and price elasticities directly from consumer behavior. Econometric estimation of a multi-stage demand system weakly separable allows us to identify three robust results, showing that: (i) own price elasticity varies significantly with time of the day as well as according to the level of equilibrium price, (ii) hourly electricity demand exhibits both complementarity and substitutability characteristics, (iii) unconditional elasticity values are different from conditional ones, thus confirming validity of multistage model. On the basis of econometric estimations we can ascertain that elasticity tends to be generally higher when hourly price peak. Considering price elasticity, electricity exhibits both substitutability and complementarity characteristic in different hours of the day, the former during the day and the latter during the night. Considering expenditure elasticity, electricity appears to be a normal good during night time and a luxury good during day time. Policy implications are interesting, because appropriate regulation can favor consumer behavior adjustment shaving consumption away from peak prices, thus yielding lower aggregate equilibrium expenditures because consumers can shift more easily their consumption from peak price hours to off peak price. So we advocate reforming the actual dual administered price structure to introduce real time pricing options for Italian consumers.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ec.unipg.it/DEFS/uploads/qd_121_web.pdf
Download Restriction: no

Paper provided by Università di Perugia, Dipartimento Economia in its series Quaderni del Dipartimento di Economia, Finanza e Statistica with number 121/2013.

as
in new window

Length: 22 pages
Date of creation: 15 Oct 2013
Date of revision:
Handle: RePEc:pia:wpaper:121/2013
Contact details of provider: Postal: via Pascoli, 20 - 06123 Perugia
Phone: +39 075 5855279
Fax: +39 075 5855299
Web page: http://www.econ.unipg.it/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Cummings, Ronald G & Harrison, Glenn W & Rutstrom, E Elisabet, 1995. "Homegrown Values and Hypothetical Surveys: Is the Dichotomous Choice Approach Incentive-Compatible?," American Economic Review, American Economic Association, vol. 85(1), pages 260-66, March.
  2. David L. Edgerton, 1997. "Weak Separability and the Estimation of Elasticities in Multistage Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 62-79.
  3. Peter C. Reiss & Matthew W. White, 2008. "What changes energy consumption? Prices and public pressures," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 636-663.
  4. repec:cup:cbooks:9780521296762 is not listed on IDEAS
  5. Xavier Labandeira & José M. Labeaga & Xiral López-Otero, 2010. "Estimation of Elasticity Price of Electricity with Incomplete Information," Working Papers 01-2010, Economics for Energy.
  6. Maskin, Eric & Tirole, Jean, 1990. "The Principal-Agent Relationship with an Informed Principal: The Case of Private Values," Econometrica, Econometric Society, vol. 58(2), pages 379-409, March.
  7. Kuo S. Huang & Sophia Wu Huang, 2012. "Consumer welfare effects of increased food and energy prices," Applied Economics, Taylor & Francis Journals, vol. 44(19), pages 2527-2536, July.
  8. Massimo Filippini, 1999. "Swiss residential demand for electricity," Applied Economics Letters, Taylor & Francis Journals, vol. 6(8), pages 533-538.
  9. Simona Bigerna and Carlo Andrea Bollino, 2014. "Electricity Demand in Wholesale Italian Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
  10. Peter C. Reiss & Matthew W. White, 2005. "Household Electricity Demand, Revisited," Review of Economic Studies, Oxford University Press, vol. 72(3), pages 853-883.
  11. Andrés Ramírez Hassan, 2012. "A Multi-Stage Almost Ideal Demand System: the case of beef demand in Colombia," DOCUMENTOS DE TRABAJO CIEF 009687, UNIVERSIDAD EAFIT.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pia:wpaper:121/2013. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Davide Castellani)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.